What Marketers Can Expect from the Customer Data Platform Boom


In the past two years, CDPs have grown from a martech curiosity to a main staple for enterprises, and new vendors are racing to the market to offer their own CDP solutions. However, as firms look to add CDPs to their technical stack, they’re becoming confused by the broad offerings that claim to be catch-all solutions that can replace existing databases or IT departments. And with marketing clouds now jumping in the picture, functionalities are becoming more unclear. Tealium’s Mike Anderson weighs in on the murkiness of the CDP industry. 

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On paper, the customer data platform (CDP) market is booming. The number of CDP vendors has grown to nearly 100, raising over $2.4 billion in funding to date. The CDP market itself is estimated to have grown 71% over the last year.

While those are objectively impressive numbers, there remains a healthy dose of skepticism among industry analysts and forecasters about whether the technology can live up to its promises. Is CDP just another flashy acronym? Can it actually deliver rich and actionable information on a customer-by-customer basis? Is it even possible to unite data pipelines from every single channel within an organization to produce such a profile?

I believe all these questions are valid — and the answers should carry a lot of weight. I’ve had an on-the-ground view of the CDP industry since the three-letter acronym was coined back in 2013, and I understand the potential hesitation toward another platform that claims to revolutionize enterprise-level marketing.

But having helped pioneer some of the core elements that define today’s true CDP players, I can say with confidence that the growth of the CDP industry isn’t a fluke. There is significant value in marketers understanding what a CDP is, what it isn’t and what its future holds — as well as the potential for missed opportunities for those who write it off now.

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Defining a true CDP 

As with any rapidly expanding market, the CDP market has seen its share of imitators and wannabes. With close to 100 vendors on the market, not every single one is a tried-and-true CDP. To define a true CDP, one that can deliver on its promises and provide undeniable ROI, a few distinguishing factors must be understood.

First, a CDP has to be able to collect, understand and act on data to influence customer decisions whenever the customer is ready to act. Some customers may be looking for real-time interactions, and some may want to take things slow. A good CDP should be able to accomplish both. To that end, the solution must be data-first, meaning it prioritizes the quality and availability of the data to facilitate harmony between tools and teams. Using CDPs as a solution to break down silos is particularly attractive — according to a recent study, about a quarter of organizations say they adopted a CDP as a way to unite their data and align their internal customer experience teams. There is a lot of confusion around why companies need a CDP but seeing how few companies are buying a CDP to unite and align their data practices— when this is a universal challenge— speaks to just how unclear it is.

To facilitate internal alignment, a CDP should offer a wide variety of integrations that can unify data from disparate channels as seamlessly as possible. A piece of software that calls itself CDP but can’t help connect every data channel shouldn’t be called CDP at all, and the data proves it. In the same study, a lack of third-party integrations was the top reason organizations cited for switching CDP providers.

Furthermore, the solution should be source-agnostic. Modern marketers carry a heavy burden of needing to stay in tune with the customer lifecycle, even when they may have no control over the sources of where data is coming from. As a result, rich customer data that lies within the supply chain, call centers and other places outside the shopping cart is often overlooked. A real CDP solution unifies these touchpoints and makes data useful to every team and every technology within the enterprise.

What the future holds for CDPs 

Why should marketers pay attention to where CDPs are headed? Marketers have seen tech come and go and might be hesitant to invest in a new offering when previous solutions still haven’t paid off.

But I believe a few differentiators set the CDP apart, and marketers that are investing now are already seeing some measurable results.

1. True CDP can align with data compliance goals

In the wake of the European Union’s General Data Protection Regulation and the California Consumer Privacy Act, the clock is ticking for a federally mandated rulebook governing data privacy to become a reality. While everyone else scrambles to get their data houses in order, marketers that partner with leading CDP providers will already be a step ahead. Sixty-two percent of marketers surveyed recently stated that CDP will be an essential part to complying with data regulations by 2025. Why? The best CDPs bring all customer data and preferences into a central repository, meaning opt in/opt outs are easy to manage, customer data is easy to eliminate completely and locating all of a customer’s data is a fast process — all critical elements to complying with modern privacy regulations.

CDP buyers should look for organizations that already prioritize data privacy best practices, so partnering with them now leaves less room for worry later. This is not just a good risk-mitigation move, it’s a smart brand building. When consumers feel assured their data is protected, they are more likely to feel comfortable sharing the necessary data for CDP to deliver innovative, personalized experiences — making the investment a win-win.

2. Advances in artificial intelligence and automation go hand-in-hand with CDP’s maturity

Marketers have no doubt heard that AI and automation will change the industry in the next five years. However, many may be wondering where this change may actually occur within their marketing operations. From what I can see, true AI-driven personalization is the wave of the future. Right now, the building blocks of this are being laid by CDPs that can collect and normalize data in real-time. In the future, this means chatbots that can have tailored conversations with customers, but also soak up their behavior though the buyer journey and make decisions based on that data in the future.

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With machine learning-enabled CDPs powering real-time, tailored decisions, marketers will also approach testing in a whole new way. Through automation, marketers will be able to more quickly and strategically test next steps and communication methods and gather smarter data around the results. The most forward-thinking organizations have already begun — 36 percent of marketers say their main motivation for implementing CDP was a desire for real-time engagement with customers.

CDPs have the power to revolutionize marketing operations. While the rapid growth of the industry is in part due to imitators, the true players on the market shouldn’t be ignored or dismissed as a flash in the pan. Beyond the pure customer insights, the right CDP can offer, marketers must also realize that a CDP solution can help future-proof their operations and keep pace with the evolution of technology like AI for years to come.





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